GMAC Files to be Bank Holding Co.On Thursday, GMAC Financial Services, the GM finance arm, applied to the Federal Reserve to become a bank holding company, allowing it to be eligible for aid under the Treasury's $700 billion bank rescue plan. The Treasury has so far invested $158.5 billion under the Troubled Asset Relief Program (TARP) in 23 banks in an effort to stabilize the financial services industry. GMAC did not say how much money it would seek, but says the money received would stay at GMAC for its business operations and would not be given to GM.
Dow Sinks; Fed Weighs Rate Cut
With the Dow Industrial Average dipping below 8,000 points for the first time since 2003 on Wednesday, and unemployment filings surging to more than 540,000 in the last week -- the highest in 16 years -- the Federal Reserve announced sharply lowered projections for economic activity through the next year.
This move by the Fed also signals a possible interest rate reduction will be announced at its next meeting on December 16. The Fed lowered rates to 1 percent, a point only seen once before in the last 50 years. Economists are predicting that the Fed will again lower rates, possibly even to zero to help buoy the floundering economy.
Big Three Await Help
The bad news from Wall Street was echoed in the answer from lawmakers to the Big Three automakers' pleas for bailout money. Investors are anxious, fearing the recession may be pushed out further if legislators aren't able to help the troubled auto industry. The financial crisis has already wiped out $6.69 trillion of value from investor portfolios in the S&P 500 since its high in October 2007.
Citigroup Gets Big Investor Push
On Thursday the long time investor and its largest shareholder, Saudi Prince Alwaleed Bin Talal, increased his stake in the banking giant Citigroup from 4 to 5 percent. Bin Talal's move comes after the government's $25 billion bailout for the troubled bank. The news of the increase did not lift the bank's stock price or affect the broader market, as the Dow was down 160 points in the first minutes of trading on Thursday.